ESTEE ADVISORS P.LTD,GURGAON vs DCIT, CIRCLE-1(1), GURGAON

Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI

Before: SHRI AMIT SHUKLA

For Appellant: Shri Sanjeev Kapoor, CA

For Respondent: Shri S.L. Anuragi, Sr. DR

Hearing: 07/01/2019

O R D E R The aforesaid appeal has been filed by the assessee against impugned order dated 28.2.2018, passed by Ld. CIT(Appeals) Gurgaon for the quantum of assessment passed u/s 143(3) for the assessment year 2014-15. The assessee is aggrieved by addition of Rs. 6,42,347/- made by the AO as deemed dividend u/s 2(22)(e).

The brief facts qua the issue involved are that, Ld. AO during the course of assessment proceedings noted that assessee has raised following sums from its subsidiary company, M/s. Estee Commodities Pvt. Ltd. in which assessee company was having shareholding of more than 10% of the equity shares: -  Loan amounting to Rs. 3,21,00,000/-  Technical fees amounting to Rs. 2,56,72,665/-  Lease Hire charges amounting to Rs. 5,39,328/-

In response, to the show cause notice, the assessee submitted that M/s. Estee Commodities Pvt. Ltd. has accumulated losses of Rs. 58.25 lacs as on 31.3.2014, therefore, there is no occasion for invoking the provision of deemed dividend. Ld. AO then asked the assessee to furnish balance sheet and profit and loss account of the subsidiary company for the financial year 2012-13 and 2013-14. On perusal of the same, Ld. AO noted that as on 31.3.2013, Company had reserve and surplus of Rs. 73,62,347/- and therefore deemed dividend has been restricted to the said amount.

Ld. CIT(A) held that out of the reserve and surplus amount of Rs. 73,62,347/-, sum of Rs. 67,20,000/- was securities premium reserve and hence only Rs, 6,42,347/- was an opening balance of the surplus as on 31.3.2014 and therefore, he restricted the addition to the extent of Rs. 6,42,347/-.

After hearing both the parties and on perusal of the impugned orders, I find that both the authorities have taken the figures of ‘reserves and surplus’ as on 31st March, 2013, instead of 31st March, 2014 which is relevant for the assessment year 2014-15. The balance sheet showing reserve and surplus of the subsidiary company M/s. Estee Commodities Private Limited as on 31st March, 2013, and as of 31st March, 2014 were as under: - Particulars As at 31st March 2014 As at 31stMarch 2013 Securities Premium Reserve 67,20,000 - Surplus – Opening balance 6,42,347 (-)2,99,948 Add: Net (loss /Profit- (-)64,69,743 9,42,295 transferred from Statement of Profit and Loss (-)58,27,396 Surplus – Closing balance 6,42,347

ESTEE ADVISORS P.LTD,GURGAON vs. DCIT, CIRCLE-1(1), GURGAON